Thursday of this week was a pretty interesting day.

The House of Representatives passed its version of the Tax Bill, which is seen as a win for Paul Ryan, President Trump and Republicans in general. Moving this along was a boon to small-cap stocks in particular — they had been waiting impatiently for the news. Also, the U.S. Bureau of Economic Analysis (BEA) announced:

“REAL GROSS domestic product (GDP) increased 3.0 percent at an annual rate in the third quarter of 2017, according to the advance estimates of the national income and product accounts (NIPAs). In the second quarter, real GDP increased 3.1 percent. The increase in real GDP in the third quarter reflected positive contributions from consumer spending, inventory investment, nonresidential fixed investment, exports, and federal government spending.”

The BEA had also noted ongoing improvement in Retail Sales, MBA Mortgage Applications and other key data including Manufacturing. The NY State Manufacturer’s Index was lower than expected (at 19.4%); nevertheless, it was good enough to earn a ‘still unusually strong’ comment from analysts.

For sure, Mr. Market seemed a happy fellow as better news came his way (and ours too).

He had been a bit frustrated with General Electric finding even more new ways to prove that it is no longer a proxy for the broader markets. The old standard bearer gave up about 14% over a couple of days trade and that, no doubt, contributed to a downgrade by Moody’s on Thursday. But, while G-E was falling short of gee-whiz, Wal-Mart and Cisco turned in stellar performances.

Cisco helped to spur the NASDAQ to another new record high and also see its own closing share price hit numbers last seen in 2001. The darling of the day though had to be Wal-Mart. While many observers of brick and mortar retail have been prattling on for over a year about falling skies being brought down on everyone by Amazon, the Bentonville firm seems to have quietly shifted from defense to offense. The big box retailer gained over 10% Thursday after reporting two bits of good news; it substantially beat analysts’ expectations for Q3 sales and earnings but it also raised its forecasts for 2018. We think that is very encouraging indeed because it reflects Wal-Mart’s belief in an increasingly healthy consumer environment. Who would want to disagree?

Market Minute 11/17/2017 –
More of the Same, and That’s Great News

So, yes, we were pleased with Mr. Market on Thursday.  And it appears to be more of what we’ve been seeing this year. Markets surge ahead for a while and then rest and recoup, and that’s followed (so far) with another surge ahead. I Like it!! 

From a technical viewpoint, I especially like the look of Small-caps – because a healthy Small-cap environment is necessary for a healthy overall marketplace. Over the past week, or so Small-caps were drifting down a bit, and managed to reach ‘oversold’ territory. When that happens we typically see either a break through support and a falling index OR a bounce with gusto – (‘Gusto’ here means decent volume in that index with a lot of stocks participating). Yesterday showed us that gusto – with the best index results in the past two months. Many of the other indexes also showed gusto – with jumps to start the day and moves upward from there. 

Who says we don’t like even more good news?

Ronald P. Denk, CFP®
Investment Advisor
Denk Strategic Wealth Partners
10000 N. 31st Avenue, Suite C-262
Phoenix, AZ 85051

Phone (602) 252-8700
Fax (602) 252-8701
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